The Letter of Agreement

Forms, Glorious Forms

Here is a quick addition to your business routine, one which could, in the long run, save you time and aggravation with clients. Next time a client calls with an assignment why not close the deal by faxing them back a copy of your studio’s Letter of Confirmation to be signed by both parties before the work begins?

Why use a document like this? The strategy is to place all parties in agreement about rights and terms before the job begins. No nasty surprises later!

Notice that we stress the word before. Contracts faxed in by the client, after work has begun, terms printed on the back of checks or supplied by the artist on invoices are all examples of after-the-fact-contracts. And working “after-the-fact” means that you are working without written agreement to rights and terms. Factors governing the job, including reprint and third party rights, alterations and the return of original art are open to interpretation and, worse, tricks of memory.

Also consider this: the earlier you and your client finalize terms, the less complicated the workflow will be later as the deadline looms — a time when there is little energy for thoughtful negotiation.

Letters of Agreement are also a way to sort out good clients from bad. If a party refuses to sign or negotiate a basic document protecting the job, this might be an indication of even more problems down the road. And problems can reduce the value of the work for you and your studio.

Put It on Paper!

What follows is a basic Letter of Agreement (aka Letter of Confirmation) based on forms and contracts sent to us over the past year. As an added plus, we ran it by Daniel Abraham, attorney, illustrator, and former chair of the Guild Public Affairs Committee, for a tight overview. We’ve included explanations and commentary. A formatted version of the letter (sans commentary) can be downloaded by signing into "Member Central" and following this link.

You can use our text to create your own basic form. Keep a template on disk for later use. Or pre-print the Letter of Agreement on the back of studio stationery, reserving the front for cover letter and custom terms space. One caveat — we’d like to emphasize the word “basic.”

As always, we recommend enlisting the services of a legal professional for complicated contractual agreements.

It All Starts Here

Letters of Agreement look very much like standard business letters. At the top is the basic correspondence information:

Unlike a standard business letter, the Letter of Agreement (LOA) requires a specific reply, and it is important that the instruction not be buried. This Agreement must be signed and returned before Artist can schedule or begin this job.

Now the letter format continues:

Date
Name of Client/Company
Address
Phone/FAX
Shipping (FedEx, Airborne) Number
Name of Person Commissioning Art
Your job number (will also be the invoice number);

Before we show you the rights clause, we’d like to explain why you should use the title: “copyright usage” instead of simply “usage.” While dealing with the Board of Equalization in California, the Guild learned that the Board bases their denial of the existence of copyright interests in reproduction rights contracts in part on the lack of appearance of the specific word “copyright.” Describing usage as a “copyright” sale eliminates the argument.

Your LOA should include under copyright usage:

Rights transferred
Duration of usage
Limitations on media in which used (if not covered under “rights,” (e.g., print rights only, no electronic usage)
Limitations on number of insertions (if appropriate)
Limitations on geographical use (ie. North American, English speaking editions, etc)
Owner of Original Art (only if different from below)
FEE FOR RIGHTS GRANTED (List the fee here)

TERMS (Note that numbering the terms in the body of the contract can serve as a good navigational support during negotiations).

1) RESERVATION OF RIGHTS: All rights not expressly granted above are retained by the Artist, including any electronic rights or usage, and including, but not limited to, all rights in sketches, comps or other preliminary materials. Any use additional to that expressly granted above requires arrangement for payment of a separate fee.
Technically, all rights not specifically signed over remain with the artist. However, the above clause backs up the assignment of rights and further protects the artist.

2) REVISIONS: Revisions may be made only by the Artist at the sketch stage. Additional fees will be charged for revisions made after (insert your standard here) sketches, and for revisions reflecting a new direction to the assignment, or new conceptual input.
We recommend the revision clause above as a matter of studio policy. Here, the artist sets reasonable limitations for revisions as well as fees for unexpected changes. How many revisions are acceptable to you? You may need to negotiate the amount of revisions you are willing to make. Notice that the clause requires the client to provide solid direction or to at least compensate the artist if the established direction changes.

3) CANCELLATION AND KILL FEES: Cancellation (“kill”) fees are due based on the amount of work completed. Fifty percent (50%) of the final fee is due within 30 days of notification that for any reason the job is canceled or postponed before the final stage. One hundred percent (100%) of the total fee is due despite cancellation or postponement of the job if the art has been completed. Upon cancellation or kill all rights to the art revert to the Artist and all original art must be returned, including sketches, comps, or other preliminary materials.
This clause helps to establish payment terms for partial and/or completed work even if the job is canceled. The ownership of rights and the work itself is also clearly defined. For more on Kill Fees see the Graphic Artist’s Guild Handbook: Pricing and Ethical Guidelines, as well as the Contract Monitor Glossary.

4) CREDITS AND COPIES: A credit line suitable to the design of the page will be used. Client agrees to pay an additional fifty percent (50%) of the total fee, excluding expenses, for failure to include credit line. Credit line is required independent of Artist’s signature, which shall be included at Artist’s discretion unless otherwise agreed in writing above. Client agrees to provide Artist with ten (10) sample copies of any printed material.

5) PAYMENT: Payment for finished work is due upon acceptance, net thirty (30) days. The Client’s right to use the work is conditioned upon receipt of payment within thirty days of acceptance, and upon Client’s compliance with the terms of this agreement. A two percent (2%) monthly service charge will be billed against late payment.

6) ORIGINAL ART: Original art remains the property of the Artist unless expressed in the agreement. Client is responsible for return of original art in undamaged condition within thirty (30) days of first reproduction.

7) ADDITIONAL EXPENSES: If Client does not provide a courier/shipping number in the space provided above, shipping charges will be added to the final invoice. Client agrees to reimburse Artist for the following expenses:
• Messengers;
• Models;
• Props;
• Travel;
• Telephone;
• Proofs;
• Disks, drives, or storage media;
• Other: (fill in other expenses)

8) PERMISSIONS AND RELEASES: The Client agrees to indemnify and hold the Artist harmless against any and all claims, costs, and expenses, including attorney’s fees, due to materials included in the Work at the request of the Client for which no copyright permission or privacy release was requested, or for which uses exceed the uses allowed pursuant to a permission or release.

Originally published in the Graphic Artists Guild Contract Monitor.

RELATED ARTICLES:

Contract Glossary
A contract is an agreement, whether oral or written, whereby two parties bind themselves to certain obligations. Synonyms: agreement or letter of agreement (if the contract takes the form of a letter). This glossary simply explains what the clauses in your contracts mean.

Covenant Gardens: Demystifying Noncompetition Agreementsby Philip I. Frankel, Esq.
There is usually confusion about how noncompetition agreements (NCAs) apply to employees or self employed individuals. Traditional NCAs apply only to an employment setting and protect the employer’s interests. Independent contractors are free to contract and negotiate any terms and conditions they want in their own agreements.

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